Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Dollar General Corp., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,431,523 – 7.76% × 26,309,034 = 389,042
Economic profit exhibited a general upward trend from February 2019 through February 2023, before experiencing a substantial contraction in February 2024. This trajectory indicates a period of significant value creation followed by a sharp decline in the ability to generate returns exceeding the cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated consistent growth for five consecutive years, rising from $1.98 billion in 2019 to a peak of $3.66 billion in 2023. However, a significant reversal occurred in 2024, with NOPAT falling to $2.43 billion, reflecting a contraction in operational profitability during the final period.
- Invested Capital and Cost of Capital
- Invested capital increased monotonically over the observed period, growing from $18.11 billion in 2019 to $26.31 billion in 2024. This suggests a continuous expansion of the asset base. Simultaneously, the cost of capital remained relatively stable, fluctuating within a narrow range between 7.76% and 8.55%, reaching its lowest point of 7.76% in February 2024.
- Economic Profit Analysis
- Economic profit grew from $502 million in 2019 to a peak of $1.64 billion in 2023, indicating a period where operational gains significantly outpaced the cost of the capital employed. This trend reversed sharply in 2024, as economic profit plummeted to $389 million. This decline was driven by the simultaneous occurrence of falling NOPAT and an increasing capital base, which severely compressed the economic surplus.
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Net Operating Profit after Taxes (NOPAT)
Dollar General Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in LIFO reserve. See details »
3 Addition of increase (decrease) in equity equivalents to net income.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 11,090,582 × 4.30% = 476,895
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 803,676 × 21.00% = 168,772
6 Addition of after taxes interest expense to net income.
The financial performance from February 2019 to February 2024 is characterized by a period of robust operational expansion followed by a sharp contraction in the final fiscal year. Both net income and net operating profit after taxes (NOPAT) exhibit a synchronized growth phase between 2019 and 2021, after which their trajectories diverge before simultaneously declining.
- Net Operating Profit After Taxes (NOPAT) Trend
- NOPAT shows a sustained upward trajectory from February 2019, increasing from $1.98 billion to a peak of $3.66 billion in February 2023. This growth indicates a strong expansion in the core operational profitability of the business over a four-year span. However, this trend reversed sharply in February 2024, with NOPAT falling to $2.43 billion, marking a significant reduction in operational earnings compared to the previous year's peak.
- Net Income Trajectory
- Net income grew steadily from $1.59 billion in 2019 to a peak of $2.66 billion in January 2021. Following this peak, net income experienced a period of instability and relative stagnation, fluctuating between $2.40 billion and $2.42 billion during 2022 and 2023. A substantial decline occurred in February 2024, with net income dropping to $1.66 billion, effectively erasing much of the gains achieved since 2019.
- Comparative Analysis of Operating vs. Bottom-Line Profitability
- A consistent positive variance exists between NOPAT and net income across all reported periods, with NOPAT remaining higher than net income. A notable divergence is observed between 2021 and 2023; while NOPAT continued to climb toward its highest point in 2023, net income failed to maintain a similar growth rate and began to plateau. This suggests that while operational efficiency improved or expanded during this window, non-operating factors—such as increased interest expenses or tax burdens—likely pressured the final net earnings. The simultaneous collapse of both metrics in 2024 indicates a broader systemic decline in both operational and overall financial performance.
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Cash Operating Taxes
Dollar General Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
The financial data reveals a fluctuating trend in tax obligations from 2019 through 2024, characterized by a significant surge in the middle of the period followed by a subsequent decline.
- Cash Operating Tax Trends
- Cash operating taxes experienced steady growth from US$ 457.1 million in February 2019 to a peak of US$ 823.4 million in January 2021. Following this peak, a downward trajectory was observed, with payments decreasing to US$ 553.2 million by February 2024.
- Provision for Income Taxes Correlation
- The provision for income taxes largely mirrored the movement of cash operating taxes, also reaching a maximum of US$ 749.3 million in January 2021. A sharp reduction is noted in the final period, falling to US$ 458.2 million in February 2024, returning to levels comparable to those observed in 2019.
- Analysis of Cash-to-Provision Variance
- A divergence between accrued tax provisions and actual cash outflows is evident across the observed timeframe. Between 2019 and 2021, cash operating taxes consistently exceeded the provision for income taxes, indicating higher immediate liquidity outflows than the recognized accounting expense. This pattern reversed in 2022 and 2023, where cash operating taxes were lower than the provision, before returning to a state where cash outflows exceeded the provision in February 2024.
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Invested Capital
Dollar General Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of LIFO reserve. See details »
4 Addition of equity equivalents to shareholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
A consistent upward trajectory in invested capital is observed from February 1, 2019, to February 2, 2024, with the total increasing from approximately 18.11 billion USD to 26.31 billion USD. This represents a significant expansion of the capital base required to generate economic value over the six-year period.
- Total Reported Debt and Leases
- A sustained increase in debt and lease obligations is evident, rising from 11.09 billion USD in 2019 to 18.09 billion USD in 2024. The most pronounced acceleration occurred between January 28, 2022, and February 3, 2023, where obligations grew by approximately 3.41 billion USD in a single year, indicating a period of intensified leveraging.
- Shareholders' Equity
- Equity levels remained relatively stagnant and exhibited volatility compared to debt. After peaking at 6.70 billion USD in January 31, 2020, equity entered a period of gradual decline, reaching a low of 5.54 billion USD by February 3, 2023. A notable recovery occurred in the final year, with equity returning to 6.75 billion USD by February 2, 2024.
- Invested Capital Composition
- The growth in total invested capital has been driven almost exclusively by the accumulation of debt and lease liabilities. While the total capital base grew by approximately 45% over the period, shareholders' equity ended the period nearly flat compared to its 2019 starting point. This shift indicates an increasing reliance on external financing and lease obligations to fund the company's asset base and operational expansion.
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Cost of Capital
Dollar General Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 33,122,041) | 33,122,041) | ÷ | 51,068,786) | = | 0.65 | 0.65 | × | 10.10% | = | 6.55% | ||
| Long-term obligations, including current portion3 | 6,856,163) | 6,856,163) | ÷ | 51,068,786) | = | 0.13 | 0.13 | × | 4.49% × (1 – 21.00%) | = | 0.48% | ||
| Operating lease liability4 | 11,090,582) | 11,090,582) | ÷ | 51,068,786) | = | 0.22 | 0.22 | × | 4.30% × (1 – 21.00%) | = | 0.74% | ||
| Total: | 51,068,786) | 1.00 | 7.76% | ||||||||||
Based on: 10-K (reporting date: 2024-02-02).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 45,094,716) | 45,094,716) | ÷ | 62,672,927) | = | 0.72 | 0.72 | × | 10.10% | = | 7.27% | ||
| Long-term obligations, including current portion3 | 6,926,511) | 6,926,511) | ÷ | 62,672,927) | = | 0.11 | 0.11 | × | 4.25% × (1 – 21.00%) | = | 0.37% | ||
| Operating lease liability4 | 10,651,700) | 10,651,700) | ÷ | 62,672,927) | = | 0.17 | 0.17 | × | 3.90% × (1 – 21.00%) | = | 0.52% | ||
| Total: | 62,672,927) | 1.00 | 8.16% | ||||||||||
Based on: 10-K (reporting date: 2023-02-03).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 52,555,043) | 52,555,043) | ÷ | 67,072,297) | = | 0.78 | 0.78 | × | 10.10% | = | 7.91% | ||
| Long-term obligations, including current portion3 | 4,442,986) | 4,442,986) | ÷ | 67,072,297) | = | 0.07 | 0.07 | × | 3.74% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 10,074,268) | 10,074,268) | ÷ | 67,072,297) | = | 0.15 | 0.15 | × | 3.70% × (1 – 21.00%) | = | 0.44% | ||
| Total: | 67,072,297) | 1.00 | 8.55% | ||||||||||
Based on: 10-K (reporting date: 2022-01-28).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 44,929,041) | 44,929,041) | ÷ | 59,094,767) | = | 0.76 | 0.76 | × | 10.10% | = | 7.68% | ||
| Long-term obligations, including current portion3 | 4,706,259) | 4,706,259) | ÷ | 59,094,767) | = | 0.08 | 0.08 | × | 3.74% × (1 – 21.00%) | = | 0.24% | ||
| Operating lease liability4 | 9,459,467) | 9,459,467) | ÷ | 59,094,767) | = | 0.16 | 0.16 | × | 3.90% × (1 – 21.00%) | = | 0.49% | ||
| Total: | 59,094,767) | 1.00 | 8.41% | ||||||||||
Based on: 10-K (reporting date: 2021-01-29).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 36,027,608) | 36,027,608) | ÷ | 47,954,115) | = | 0.75 | 0.75 | × | 10.10% | = | 7.59% | ||
| Long-term obligations, including current portion3 | 3,142,019) | 3,142,019) | ÷ | 47,954,115) | = | 0.07 | 0.07 | × | 3.46% × (1 – 21.00%) | = | 0.18% | ||
| Operating lease liability4 | 8,784,488) | 8,784,488) | ÷ | 47,954,115) | = | 0.18 | 0.18 | × | 4.20% × (1 – 21.00%) | = | 0.61% | ||
| Total: | 47,954,115) | 1.00 | 8.37% | ||||||||||
Based on: 10-K (reporting date: 2020-01-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 30,485,674) | 30,485,674) | ÷ | 41,575,960) | = | 0.73 | 0.73 | × | 10.10% | = | 7.40% | ||
| Long-term obligations, including current portion3 | 2,864,280) | 2,864,280) | ÷ | 41,575,960) | = | 0.07 | 0.07 | × | 3.62% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 8,226,006) | 8,226,006) | ÷ | 41,575,960) | = | 0.20 | 0.20 | × | 3.62% × (1 – 21.00%) | = | 0.57% | ||
| Total: | 41,575,960) | 1.00 | 8.17% | ||||||||||
Based on: 10-K (reporting date: 2019-02-01).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Dollar General Corp., economic spread ratio calculation, comparison to benchmarks
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | Feb 1, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 389,042) | 1,643,529) | 1,275,236) | 1,348,906) | 544,353) | 502,245) | |
| Invested capital2 | 26,309,034) | 24,763,719) | 21,499,995) | 20,896,699) | 19,125,860) | 18,107,408) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 1.48% | 6.64% | 5.93% | 6.46% | 2.85% | 2.77% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Costco Wholesale Corp. | 5.78% | 0.98% | 5.07% | 3.48% | — | — | |
| Target Corp. | -2.07% | -3.85% | 8.83% | -0.64% | — | — | |
| Walmart Inc. | 1.02% | -1.39% | -0.85% | 0.61% | — | — | |
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 389,042 ÷ 26,309,034 = 1.48%
4 Click competitor name to see calculations.
The analysis of economic value generation indicates a period of significant expansion in value creation followed by a sharp contraction in the most recent fiscal year. While capital deployment has remained on a steady upward trajectory, the efficiency and absolute volume of economic profit have experienced substantial volatility.
- Invested Capital Trends
- A consistent upward trend is observed in invested capital, which grew steadily from US$ 18,107,408 thousand in February 2019 to US$ 26,309,034 thousand by February 2024. This represents a continuous expansion of the capital base utilized to drive operations over the observed six-year period.
- Economic Profit Performance
- Economic profit exhibited significant fluctuations, characterized by a substantial surge beginning in January 2021. The value increased from US$ 502,245 thousand in 2019 to a peak of US$ 1,643,529 thousand in February 2023. This growth trend was abruptly reversed in February 2024, when economic profit fell to US$ 389,042 thousand, marking the lowest point in the analyzed timeframe.
- Economic Spread Ratio Analysis
- The economic spread ratio closely tracks the movement of economic profit, reflecting the efficiency of capital utilization. The ratio remained stable at approximately 2.77% to 2.85% between 2019 and 2020, before climbing sharply to 6.46% in 2021. After achieving a maximum of 6.64% in February 2023, the ratio experienced a severe decline to 1.48% in February 2024. This sharp contraction indicates a significant narrowing of the spread between the return on invested capital and the cost of that capital.
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Economic Profit Margin
Dollar General Corp., economic profit margin calculation, comparison to benchmarks
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | Feb 1, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 389,042) | 1,643,529) | 1,275,236) | 1,348,906) | 544,353) | 502,245) | |
| Net sales | 38,691,609) | 37,844,863) | 34,220,449) | 33,746,839) | 27,753,973) | 25,625,043) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 1.01% | 4.34% | 3.73% | 4.00% | 1.96% | 1.96% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Costco Wholesale Corp. | 0.76% | 0.14% | 0.72% | 0.52% | — | — | |
| Target Corp. | -0.66% | -1.07% | 2.51% | -0.21% | — | — | |
| Walmart Inc. | 0.25% | -0.34% | -0.23% | 0.18% | — | — | |
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 389,042 ÷ 38,691,609 = 1.01%
3 Click competitor name to see calculations.
An analysis of the economic value added metrics reveals a divergence between steady revenue growth and the volatility of economic profit over the six-year period ending February 2, 2024.
- Net Sales Growth
- A consistent and linear upward trend in net sales is observed, rising from $25.6 billion in February 2019 to $38.7 billion by February 2024. This indicates sustained expansion in top-line performance throughout the analyzed timeframe.
- Economic Profit Volatility
- Economic profit demonstrated significant fluctuations. After maintaining a stable trajectory between 2019 and 2020, a substantial increase occurred in 2021, with profit rising to $1.35 billion. Following a peak of $1.64 billion in February 2023, a sharp contraction is noted in February 2024, where economic profit fell to $389 million.
- Economic Profit Margin Trends
- The economic profit margin mirrored the volatility of absolute economic profit. The margin remained flat at 1.96% from 2019 to 2020, followed by a period of expansion that peaked at 4.34% in 2023. However, by February 2024, the margin collapsed to 1.01%, the lowest level recorded in the period.
The evidence suggests that while the organization successfully scaled its sales volume, the efficiency of generating economic value relative to those sales declined precipitously in the final year, resulting in a significant erosion of the economic profit margin despite record net sales.
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